Several university researchers and technology start-up companies have achieved major breakthroughs in the area of artificial photosynthesis. Photosynthesis is the process in which green plants use energy from sunlight to convert water and carbon dioxide into oxygen and carbohydrates. This is one of the Holy Grails of energy. If technology could find a way to cost effectively remove carbon dioxide from the atmosphere and create fuel, there would be two significant impacts - less demand for oil as a transportation fuel and mitigation of the impact of burning fossil fuels on the environment by removing CO2 from the atmosphere.
Recently, researchers at Lawrence Berkeley National Laboratory and the University of California, Berkeley, have created a system that can capture carbon dioxide before it is released into the atmosphere and convert it into fuels, pharmaceuticals, plastics, and other valuable products. The heart of the new system is an array of minute silicon and titanium oxide wires coated with bacteria. The "nanowires" capture light energy and deliver it to the bacteria, which then convert carbon dioxide in the air into acetate, a key building block for the more complex organic molecules in fuels, biodegradable plastics, and pharmaceuticals. The current system has an efficiency of 3 percent. It is believed that if the process can achieve 10 percent efficiency in a cost-effective manner, the technology should be commercially viable.
Another approach to using photosynthesis is being tested by Joule Biotechnologies, using a process that was named a top 10 breakthrough technology by MIT in 2010. By manipulating and designing genes, Joule has created photosynthetic microorganisms that use sunlight to efficiently convert carbon dioxide into ethanol or diesel. Joule grows the microbes in photobioreactors that need no fresh water and occupy only a fraction of the land needed for biomass-based approaches. The creatures secrete fuel continuously, so it's easy to collect. Lab tests and small trials lead to estimates that the process will yield 100 times as much fuel per hectare as fermenting corn to produce ethanol, and 10 times as much as making it from sources such as agricultural waste. Costs are expected to be competitive with those of fossil fuels.
Note: also see OWOE Cool Tech - Algae Based Biofuels